A. Introduction

Efforts to prevent money laundering and the financing of terrorism are costing the financial sector billions of dollars. Banks are also exposed to huge penalties for failure to follow KYC guidelines. Costs aside, KYC can delay transactions and lead to duplication of effort between banks.

Primechain™ Technologies, a blockchain company with the mission of building blockchains for a better world, has developed an open source solution for corporate KYC on the blockchain.

Primechain-eKYC is a permissioned blockchain for sharing corporate KYC records. Primechain-eKYC records are stored in the blockchain in an encrypted form and can only be viewed by entities that have been “whitelisted” by the issuer entity. This ensures data privacy and confidentiality while at the same time ensuring that records are shared only between entities that trust each other.

Currently, the project is built on Multichain. Soon the Hyperledger Sawtooth and Hyperledger Fabric versions will also be released.

B. Pain Points in KYC

Based on discussions with banks and financial institutions across the globe and analysis of relevant industry surveys and reports, we have identified the following pain points in the current KYC process:

The absence of a common standard in the KYC documentation process.

On-boarding a client takes several weeks.

KYC does not end at on-boarding. It starts there. Banks are obligated to monitor and update changes to KYC data.

KYC costs for financial institutions are huge, averaging millions of dollars a year.

Corporates don’t report KYC changes on a proactive and regular basis.

Banks don’t update their records on a proactive and regular basis.

Duplication of effort involved in KYC. Companies have multiple relations with multiple banks and financial institutions and are required to provide the same information multiple times – to different banks and sometimes even to the same bank.

KYC and customer due diligence systems are not usually connected to the transaction monitoring systems.

D. How Does It Work

Primechain-eKYC is a shared permissioned blockchain that has two types of nodes – Admin nodes and Member nodes. Admin nodes are responsible for permitting nodes operated by verified banks and financial institutions to connect to the Primechain-eKYC blockchain. Member nodes are operated by verified banks and financial institutions.

When a new record is uploaded to the blockchain, the following information must be provided:

Corporate Identity Number (CIN) of the entity to which this document relates – This information is stored in the blockchain in plain text / un-encrypted form and cannot be changed.

Primechain User Dashboard

Document category – This information is stored in the blockchain in plain text / un-encrypted form and cannot be changed.

Upload Record

Document type – This information is stored in the blockchain in plain text / un-encrypted form and cannot be changed.

Search Record

A brief description of the document – This information is stored in the blockchain in plain text / un-encrypted form and cannot be changed.

Manage Whitelist

The document – This document is stored in the blockchain in AES encrypted form and cannot be changed. The decryption key is stored in the uploaders dedicated private database and does NOT go into the blockchain. The key is shared only with whitelisted entities who choose to download the document. This document can be in pdf, word, excel, image or other formats.

Search Records

Disclosure: The author is a co-founder of Primechain Technologies Pvt. Ltd.

Disclaimer: This is a press release. ICO or Token investments are full of speculative and market risks. This article is only for information purposes and not an investment advice. Please conduct your own thorough research and due diligence before investing.

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Rohas Nagpal is a blockchain evangelist and Chief Blockchain Architect of Primechain Technologies Pvt. Ltd.
Rohas comes from a cyber crime investigation and security background and has been working in that field since the mid 1990s. He co-founded Asian School of Cyber Laws in 1999 and has investigated cyber crimes & data breaches for hundreds of organisations across most industry and Government sectors. He has assisted the Government of India in framing draft rules and regulations under the Information Technology Act.
He developed an interest in virtual currencies in 2011 while investigating a case of organized criminals using bitcoin. Since 2015, he has been working extensively in the blockchain / distributed ledger technology domain.
At Primechain Technologies, he oversees the management of BankChain - a community of 37 banks for exploring, building and implementing blockchain solutions.
He has filed for a provisional US patent titled "Transparent self-managing Know Your Customer (KYC) program using blockchain and smart contracts". His document on Man-in-the-middle attacks has been cited in patent US 8677466 B1 titled Verification of digital certificates used for encrypted computer communications (filed 2010).
Some of the open-source projects that Rohas contributes to are YobiChain and the Blockchain Security Controls. He has authored 18 books & whitepapers (including the Cyber Crime Investigation Manual & Woman 2.0).